Commercial Vehicle Insurance Transfer Process

What is Commercial Vehicle Insurance Transfer?

Commercial vehicle insurance is associated with the vehicle, not the vehicle owner. Therefore, when you sell your commercial vehicle, the insurance must also be transferred to the new vehicle owner.

Commercial vehicle insurance must be transferred as per Section 157 of the Motor Vehicles Act, 1988. It is necessary for both parties involved in the transfer of the commercial vehicle to transfer the vehicle insurance by a specific deadline.

How to Transfer Commercial Vehicle Insurance?

Use the steps given below to transfer your commercial vehicle insurance easily:

1. Initiate the RC Transfer

   The buyer and seller must complete the RC transfer process of the commercial vehicle with the concerned RTO. Submit the applicable ownership transfer RTO forms, including Forms 29 and 30, along with the No Objection Certificate (NOC), and obtain the updated Registration Certificate (RC) or transfer acknowledgment.

2. Inform your Insurer

   Inform your insurance company and raise a request for the commercial vehicle insurance transfer. Submit the required documents and fill out the required forms. You must apply for the policy transfer within the prescribed period (15-30 days) to avoid any penalties.

3. Vehicle Inspection

   The insurer will review the policy details and the commercial vehicle details, such as Gross Vehicle Weight (GVW), seating capacity, usage, etc., before issuing the new policy for the new owner.

4. Pay the Required Fee

   Pay the transfer charges or applicable fees to the insurance company and complete the commercial vehicle insurance transfer process. You will also need to pay the adjusted premium, if the terms and conditions are specified in the policy wording.

5. Insurer will Issue the New Policy

   Once the insurer completes the process mentioned above, the new policy will be issued for the new owner. Verify all the details, such as vehicle registration number, policy period, coverage type and other details before relying on the updated document.

Documents Required for Commercial Vehicle Insurance Transfer

You must submit the following documents when transferring commercial vehicle insurance:

When Do You Need to Transfer Commercial Vehicle Insurance?

You need to transfer commercial vehicle insurance whenever ownership of the insured commercial vehicle changes. For instance, you sell a truck, tempo, taxi or bus to another person. The insurance policy must be transferred and updated to reflect the new owner's details.

As per Section 157 of the Motor Vehicles Act, 1988, the new buyer must legally transfer the commercial vehicle insurance within 30 days of the RC transfer instead of 14 days (with effect from 15 August 2026). The buyer will need to transfer the existing comprehensive commercial vehicle insurance policy separately for each component (third-party and own-damage).

Third-Party vs Comprehensive Commercial Insurance Transfer

When the ownership of a commercial vehicle insurance changes, you will have to transfer the policy as per the coverage it offers:

What Happens to NCB When Commercial Vehicle Insurance Is Transferred?

The No Claim Bonus (NCB) with commercial vehicle insurance is a discount earned by the policyholder for every claim-free policy period. It only applies to the own-damage premium, not the third-party premium with a comprehensive commercial vehicle insurance. When a commercial vehicle is sold to the new owner, the NCB does not transfer to the new buyer as it is a reward for the policyholder. Here is how NCB works during a commercial vehicle insurance transfer:

• Current Policyholder (Seller): The policyholder is eligible to retain their current NCB and use it for another commercial vehicle and its insurance with an NCB certificate from the insurer.
• For the New Buyer: The buyer cannot use the previous owner's NCB. The insurer calculates the new applicable premium based on the commercial vehicle.
• If the New Buyer has an NCB: The buyer can submit the required NCB certificate to the insurer to get a discount on the commercial vehicle insurance policy.

Example of NCB Adjustment

Suppose a commercial vehicle's existing policy includes a 25% NCB discount on its own-damage premium. The vehicle is then sold to a new owner who is not eligible for that discount. The commercial vehicle insurance companies recalculate the premium for the remaining policy period without the seller's NCB and collect the applicable difference. The buyer does not inherit the seller's discount merely by purchasing the vehicle. The actual amount payable depends on the own-damage premium, the remaining policy period and the buyer's NCB eligibility.

Important Things to Know When Transferring Commercial Vehicle Insurance

1. Do Not Delay the Insurance Transfer

   You must transfer the commercial vehicle insurance within 30 days and not delay the transfer process, as driving without valid insurance is a punishable offense.

2. Commercial Vehicle Permit and Fitness Certificate

   Commercial vehicles must have the mandatory state and national permit and vehicle fitness certificate to legally ply on Indian roads. Before commercial vehicle insurance transfer, make sure that the commercial vehicle has a valid permit and fitness certificate.

3. Understand Premium Adjustments

   Commercial vehicle insurance premiums depend on factors such as vehicle type, carrying or seating capacity, insured value, usage and selected coverage. If the new owner intends to change the vehicle's usage category, the insurer may need to reassess the risk and revise the premium. For example, a vehicle being used for goods transportation may require a different risk assessment from a passenger-carrying vehicle.

4. Calculate Your NCB

   The No Claim Bonus (NCB) belongs to the policyholder, not the vehicle. Therefore, the seller's accumulated NCB does not transfer to the buyer along with the commercial vehicle. Both the buyer and seller must have their own respective NCB to get the discount on the premium.

5. Check for Vehicle Inspection

   The insurer might need it depending on the vehicle's condition, category, existing coverage and the insurer's requirements. An inspection is not necessarily mandatory for every transfer, so confirm the applicable procedure with the insurer.